Silvergate - exposure - USDC ?

[Croin]

Hey guys!

as Silvergate seems to have issues more and more players seem to have exposure to them.
How do you assess the risk for USDC, especially bcs Circle has def. exposure to Silvergate.

Once Silvergate goes bust, whats the risk that also USDC depegs?

Greetings!

[Croin]

Well.... it wasn't Silvergate thought!

[TravelMug]

Well it has de-pegged alreadyif I'm not mistaken, I didn't follow USDC though, and there are articles that they are exposed on Silvergate as $3.3B stuck with Silicon Valley Bank per confirmation:

Almost immediately after USD Coin (USDC) issuer Circle revealed it could not withdraw $3.3 billion of its $40 billion reserves from Silicon Valley Bank (SVB), the resultant sell-off caused the price of the stablecoin to fall below its $1 peg.

https://cointelegraph.com/news/usdc-depegs-as-circle-confirms-3-3b-stuck-with-silicon-valley-bank

And for sure, this will have a like a negative effect, although Bitcoin has bounce back already, but as far as some altcoins, gonna be hard because of this negative news on Circle.

[OcTradism]

It is funny to see centralized banks fud Bitcoin, cryptocurrencies and cryptocurrency exchanges including centralized exchanges, stable coins but they started to collapse.

Effects from Silvergate and Sillicon Valley Bank are really big especially SVB for tech-companies. I can not imagine how the effecfs are big and how long will it last as well as how many tech-companies will be affected by this collapse. It is a second biggest bank collapse in history of the USA.

A more serious issue is Janet Yelen told that there are some other banks are under observation now. Nightmare has yet ended and now it is not safely to store your fiat currencies at central banks. Similar to it is very risky to store your cryptocurrencies on centralized exchanges after collapse of FTX.

[vv181]

Well.... it wasn't Silvergate thought!

Yes, I thought they also has exposure to Silvergate, but besides SVB becoming the cause, Silvergate is winding down. According to their latest update on the whole current issue, they had been taken off any reserves from Silvergate right before its closure.

USDC has zero exposure to Silvergate; we had transferred out what were limited reserves to support transaction settlement with USDC prior to bank closure.

Back to SVB, another point worth taking is their assurance:

However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders.

In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.

In regard to their other reserves, they further down reduce their position on bank risks. Anyway let's see how it will go through on Monday, as of now, it currently has risen to $0.98 per CMC data.

[Luffygroove]

The risk of USDC depegging from the US dollar due to the potential insolvency of Silvergate is difficult to assess without more information on the specific mechanisms that underpin USDC's peg to the US dollar. However, it is important to note that Circle, the company behind USDC, has stated that their USDC reserves are held in multiple banking partners, and not just Silvergate.

While Silvergate Bank is a major banking partner for Circle, it is not the sole bank that holds USDC reserves. Circle has also stated that they have implemented risk management measures to mitigate the risk of any single banking partner's failure affecting the value of USDC.

That being said, it is always important to assess the risks associated with any investment or financial transaction. If you have concerns about the risks of USDC, you may want to consider diversifying your holdings across multiple stablecoin issuers and conducting thorough research on each issuer's risk management measures.

[Kemarit]

The risk of USDC depegging from the US dollar due to the potential insolvency of Silvergate is difficult to assess without more information on the specific mechanisms that underpin USDC's peg to the US dollar. However, it is important to note that Circle, the company behind USDC, has stated that their USDC reserves are held in multiple banking partners, and not just Silvergate.

While Silvergate Bank is a major banking partner for Circle, it is not the sole bank that holds USDC reserves. Circle has also stated that they have implemented risk management measures to mitigate the risk of any single banking partner's failure affecting the value of USDC.

That being said, it is always important to assess the risks associated with any investment or financial transaction. If you have concerns about the risks of USDC, you may want to consider diversifying your holdings across multiple stablecoin issuers and conducting thorough research on each issuer's risk management measures.

What more do you need though? I mean Silvergate has filed bankruptcy already, and that's why Circle and it's stable coins are into a big problem right now. And it might choke other stable coins too or worst the whole altcoin market.

Stablecoins are good to hedge our crypto in a bear market or when the price is going down.

But if stablecoins themselves is depegging, then it defeats it's purposed and it will be like any other crypto, which is very volatile now.

[Yogee]

[....] If you have concerns about the risks of USDC, you may want to consider diversifying your holdings across multiple stablecoin issuers.

Or you could just use fiat. There are already several apps and platforms that allows users to convert to their local currency so that could be a better option than the risk of another stable coin collapsing. The possible drawback here is that you'll probably have to come clean with your Government and declare that amount in your tax returns hehe. It's all up to you.

[so98nn]

Too late to ask this question but as far as I have read Silvergate is already bust and most of the big players have stopped working with the bank. It is said that various powerful exchangers like coinbase, binance have already withdrawn most of the money from Silvergate accounts and using other banks to keep their business stable. (Why wouldn’t they!)

Coming back to the USDC thing, it has got to do nothing with the bust scenario. You can say it will get hampered if the exchangers are hampered in terms of their fiat liquidity. I see no direct relationship between Silvergate and USDC.

[Hallroom]

Cryptocurrencies are risky for long-term holders because it is best not to hold long-term holdings of stablecoins.  It would be best if you keep 8% of the assets and invest the rest of the assets in Bitcoin or other coins. Because this bear market will now be ready for a bull run.
 At that time your portfolio will be in the market.

[bittraffic]

Well.... it wasn't Silvergate thought!

Yes, I thought they also has exposure to Silvergate, but besides SVB becoming the cause, Silvergate is winding down. According to their latest update on the whole current issue, they had been taken off any reserves from Silvergate right before its closure.

USDC has zero exposure to Silvergate; we had transferred out what were limited reserves to support transaction settlement with USDC prior to bank closure.

Back to SVB, another point worth taking is their assurance:

However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders.

In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.

In regard to their other reserves, they further down reduce their position on bank risks. Anyway let's see how it will go through on Monday, as of now, it currently has risen to $0.98 per CMC data.

It's on the news just today that FDIC has taken over already and this could end that to a terrible loss because even if a person has over $10M in the bank, they will return only the insurance which is $250,000.

From what I have read was that this depeg issue was because of the unrealized loss. I got confused already with such a term. But that is exactly what I have read on some reliable sites.

[vv181]

~

It's on the news just today that FDIC has taken over already and this could end that to a terrible loss because even if a person has over $10M in the bank, they will return only the insurance which is $250,000.

From what I have read was that this depeg issue was because of the unrealized loss. I got confused already with such a term. But that is exactly what I have read on some reliable sites.

IIRC, it only accounts for <3% of insured holders and the insured funds' amount could be returned up to $250,000.

A few reasons why it got depegged is because there is FUD of Circles reserve area still on Silvergate, and their withdrawal from SVB is stuck. So the market reacts by selling USDC to another token which makes the price reducing. Note that Binance and Coinbase are also pausing the USDC trade to prevent it from going down way deeper.

Since FDIC already make it way, there are two possible options that Circle could hope/relies on:

What do we expect with SVB and the FDIC?

We have reason to believe that under applicable FDIC policy, transfers initiated prior to a bank entering receivership would have otherwise been processed normally. In other words, the FDIC should allow transactions to settle in the ordinary course through the end of a bank’s standard daily processing cycle until the FDIC takes control of the failed institution. We understand that the FDIC is currently determining the status of transactions initiated prior to the applicable receivership cutoff times, and it is possible that the transfers initiated on Thursday will be processed on Monday.

Moreover, SVB has a strong franchise that is at the center of American entrepreneurship and technology industry growth. We are hopeful that the FDIC as receiver will seek a rapid purchase and assumption of a franchise as strong as SVB's to ensure all depositors are made whole.

However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders.

In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.

[blockman]

With what happened, I'd be careful for all of the stablecoins out there. But let's see if this mess will be fixed by Circle as it seems that the market is recovering somehow despite how it had made some issues this weekend. I'm remembering that whenever we're on a weekend, something like this should happen and then when the weekend is about to be done, something good is about to happen. Currently, DAI and USDC are at the same price of $0.97. So, a little more cent in decimals, and it'll be tallied and tied again with the price of a US dollar. Basically, when there are depegging that happens, as long as there's a solution from the involved companies, the market is also reacting so fast up to the point that bitcoin can gain a $1k within less than a day or two.

[Luffygroove]

The risk of USDC depegging from the US dollar due to the potential insolvency of Silvergate is difficult to assess without more information on the specific mechanisms that underpin USDC's peg to the US dollar. However, it is important to note that Circle, the company behind USDC, has stated that their USDC reserves are held in multiple banking partners, and not just Silvergate.

While Silvergate Bank is a major banking partner for Circle, it is not the sole bank that holds USDC reserves. Circle has also stated that they have implemented risk management measures to mitigate the risk of any single banking partner's failure affecting the value of USDC.

That being said, it is always important to assess the risks associated with any investment or financial transaction. If you have concerns about the risks of USDC, you may want to consider diversifying your holdings across multiple stablecoin issuers and conducting thorough research on each issuer's risk management measures.

What more do you need though? I mean Silvergate has filed bankruptcy already, and that's why Circle and it's stable coins are into a big problem right now. And it might choke other stable coins too or worst the whole altcoin market.

Stablecoins are good to hedge our crypto in a bear market or when the price is going down.

But if stablecoins themselves is depegging, then it defeats it's purposed and it will be like any other crypto, which is very volatile now.

May I know which source that you use to refer that Silvergate has filed bankruptcy already? and as far as I know there is no indication that it is insolvent or that USDC is in danger of depegging from the US dollar, however of course we should always be vigilant with every situation that happened in the crypto world to keep safe.

[gunhell16]

The risk of USDC depegging from the US dollar due to the potential insolvency of Silvergate is difficult to assess without more information on the specific mechanisms that underpin USDC's peg to the US dollar. However, it is important to note that Circle, the company behind USDC, has stated that their USDC reserves are held in multiple banking partners, and not just Silvergate.

While Silvergate Bank is a major banking partner for Circle, it is not the sole bank that holds USDC reserves. Circle has also stated that they have implemented risk management measures to mitigate the risk of any single banking partner's failure affecting the value of USDC.

That being said, it is always important to assess the risks associated with any investment or financial transaction. If you have concerns about the risks of USDC, you may want to consider diversifying your holdings across multiple stablecoin issuers and conducting thorough research on each issuer's risk management measures.

What more do you need though? I mean Silvergate has filed bankruptcy already, and that's why Circle and it's stable coins are into a big problem right now. And it might choke other stable coins too or worst the whole altcoin market.

Stablecoins are good to hedge our crypto in a bear market or when the price is going down.

But if stablecoins themselves is depegging, then it defeats it's purposed and it will be like any other crypto, which is very volatile now.

May I know which source that you use to refer that Silvergate has filed bankruptcy already? and as far as I know there is no indication that it is insolvent or that USDC is in danger of depegging from the US dollar, however of course we should always be vigilant with every situation that happened in the crypto world to keep safe.

Silvergate voluntarily shutdown their business according to this link https://www.cnbc.com/2023/03/08/silvergate-shutting-down-operations-and-liquidating-bank.html and its declaration of bankruptcy is even how did it affect the market causing the value of bitcoin to drop a bit.

But bitcoin immediately bounced back in its market price. But even so, I think that this kind of thing happens normally, it just depends on the other community if they are led to panic selling.

[yazher]

I don't really think this news has any impact on most users here because we are talking about stablecoins and they don't really care about it here because it's not an investment material where you gonna wait for its price to grow in the future, it's just a mere stablecoin. Unless they are holding huge amounts of it and they are now panicking because they see some reason for its price to crash even though it's not from its nature to be like that. To be honest, I never thought stablecoins will gonna have problems such as this one, I thought they can't be affected by the bearish market but they seem to have to face another problem here.

[Kemarit]

The risk of USDC depegging from the US dollar due to the potential insolvency of Silvergate is difficult to assess without more information on the specific mechanisms that underpin USDC's peg to the US dollar. However, it is important to note that Circle, the company behind USDC, has stated that their USDC reserves are held in multiple banking partners, and not just Silvergate.

While Silvergate Bank is a major banking partner for Circle, it is not the sole bank that holds USDC reserves. Circle has also stated that they have implemented risk management measures to mitigate the risk of any single banking partner's failure affecting the value of USDC.

That being said, it is always important to assess the risks associated with any investment or financial transaction. If you have concerns about the risks of USDC, you may want to consider diversifying your holdings across multiple stablecoin issuers and conducting thorough research on each issuer's risk management measures.

What more do you need though? I mean Silvergate has filed bankruptcy already, and that's why Circle and it's stable coins are into a big problem right now. And it might choke other stable coins too or worst the whole altcoin market.

Stablecoins are good to hedge our crypto in a bear market or when the price is going down.

But if stablecoins themselves is depegging, then it defeats it's purposed and it will be like any other crypto, which is very volatile now.

May I know which source that you use to refer that Silvergate has filed bankruptcy already? and as far as I know there is no indication that it is insolvent or that USDC is in danger of depegging from the US dollar, however of course we should always be vigilant with every situation that happened in the crypto world to keep safe.

It could be the semantics, but if you read here,

(Reuters) - Crypto-focused bank Silvergate Capital Corp became the latest casualty of a meltdown in the industry after announcing plans to wind down operations and voluntarily liquidate.

Founded in 1988, Silvergate ventured into crypto in 2013. The bank in December said it would shut its mortgage warehouse business amid rising interest rates and declining mortgage volumes.

https://www.usnews.com/news/technology/articles/2023-03-09/crypto-lender-silvergates-descent-into-voluntary-liquidation

So whatever you call it, bankruptcy or collapse or meltdown, still the same.

And if you check the price of USDC, it is still way below $1,

$0.9898

as per CMC

So they are not in danger, they are already in that situation as it has depegged in the last couple of days.

[bitgolden]

as Silvergate seems to have issues more and more players seem to have exposure to them.
How do you assess the risk for USDC, especially bcs Circle has def. exposure to Silvergate.

Once Silvergate goes bust, whats the risk that also USDC depegs?

Along comes silicon valley bank as well at the same time. I know that it is not going to be easy at all for people to realize that this is going to hurt the world, not just USA, not just some companies, but this is going to hurt the whole world.

Well, these won't be the last banks that will crash, we are going to see plenty of them at the same time and that is why I believe that we will see another bail out period and that means we are going to end up with a ton of money printed to save these banks as well. So all in all it is going to hurt the world as well because whenever banks in the USA fails, that has a ripple impact on the whole world, aka 2008 style.

[jacafbiz]

We can all see that the issue with Silvergate is very negligible as compared to what other banks pose to the system, I read that Silvergate was forced to shut down because it is one of the most Crypto friendly banks out there and the close down is now causing a serious systemic risk to the bank system, their book is not as bad as other banks when you look at their book but this is the world we find ourselves. Crypto is now in a serious dillema state and we need to thread carefully

[Hallroom]

Not only did Silvergate collapse, but Silicon Valley Bank's stock market slump is having a huge impact on the crypto market. So that's why the bitcoin market had a massive downtrend. But usdc stable coins are definitely risky to hold. So avoid USDC coins.
The Bitcoin market is back to normal levels. But I think investors got an opportunity to invest in this downturn.